Rigid budgets break, so we built YNAB to be flexible. Overspending happens—your budget is here to help you get back on track.
If you have general questions about covering overspending (or you're looking to know more about cash overspending), head over here. If credit overspending is what you're after, read on!
Budgeted vs. Non-Budgeted Spending
There are two types of spending in YNAB—budgeted and non-budgeted. That's true for spending with cash, and for spending with credit. Of course, YNAB is helping you plan for your credit card payments, so credit spending is handled a bit differently.
When you make a purchase on your credit card that's budgeted for, dollars will move to your Credit Card Payment category—they'll sit there until you're ready to pay the bill.
When you use your credit card to buy something and you haven't budgeted for it, dollars will not move to your Credit Card Payment category—you now have debt on the card you'll need to cover in the future.
Take a look at my Credit Card Payment category after the $100 budgeted purchase at the Grocery Store and the $75 non-budgeted purchase Target:
I only have $100 for my payment! When I click on Activity, the pop-up gives me a breakdown: $175 in total spending, of which $100 was budgeted. This means that I can only afford to pay $100, even though my balance is $175.
Overspending as Debt
Ideally, you'll move money to cover overspending in the month it happens. If you do, YNAB has your back—dollars will be moved to the Credit Card Payment category for your payment and you won't have a care in the world when your credit card statement arrives.
But what happens if you can't cover the overspending before the month ends? You've accrued debt.
When the month rolls over, categories with credit overspending reset to $0—you no longer need to budget in the previous month to cover the purchase. Now you owe your credit card company money, and you need to budget for a higher payment. Add funds directly to the Credit Card Payment category in the current month.
Once the Payment amount in the Credit Card Payment category matches what you need to pay—debt from previous overspending plus money for new budgeted purchases—you can confidently make your payment. Need a refresher on credit card payments? We've got you covered.